Money

It will take Canadians two days longer this year to be free of federal and provincial tax burdens and to start working for themselves, the Fraser Institute said.

Annual Tax Freedom Day falls on June 6 this year, the day Finance Minister Jim Flaherty will retable the federal budget in Parliament.

Tax Freedom Day is a measure to show the impact of taxes on Canadian families. If Canadians had to pay all taxes up front they would have to hand over every penny they earned to the government up to that date.

The Fraser Institute warns that Tax Freedom Day would fall 16 days later if governments paid for their current level of spending by raising taxes, rather than running up deficits.

"Today's deficits must one day be paid for by taxes. The longer the government delays balancing its books, the more likely it is that Tax Freedom Day will fall later in the year," said Niels Veldhuis, Fraser Institute senior economist and co-author of the report.

Tax Freedom Day is later this year mainly because of the improving economy. As Canadians earn more they tend to move into higher tax brackets, thus owing more to the government, according to the think-tank.

In 2011, the average family will earn $93,831 and pay $39,960 in taxes. That means the tax bill represents about 42.6% of annual income.

Over the past year, income taxes increased the most, rising by $550, while sales taxes jumped by $335.

"Canadians are taxed by federal, provincial, and local governments in ways that are both obvious, such as income tax, and ways that are hidden, such as alcohol, amusement, and gasoline taxes," Veldhuis said.

"It's virtually impossible for the ordinary citizen to know exactly how much tax they are paying. Tax Freedom Day gives Canadians a true picture of their total tax burden and thereby allows Canadians to consider whether they get value for their tax dollars."

Across the country, Alberta earns the earliest Tax Freedom Day on May 19, followed by Prince Edward Island on May 27.

Newfoundland and Labrador citizens are the last to be free of the tax burden, with the cutoff on June 19, while Quebec had the biggest extension, with tax freedom coming four days later than last year.